Ethanol bill earns Illinois cash, boosts struggling market

SPRINGFIELD — Illinois biofuel companies, like Marquis Energy, have been struggling to sell their ethanol in the United States since a federal tax credit on ethanol-blended gasoline expired in December, leaving the market glutted.

Marquis Energy in Hennepin has been turning Illinois corn into 100 million gallons of ethanol a year since 2008 — part of a biofuel boom over the past decade that helped make almost all regular gasoline sold in the U.S. 10 percent ethanol, called E10.

Now there’s more ethanol in the U.S. than American drivers are buying. “Since January, we've had some very tight (profit) margins” said Jason Marquis, the company’s plant manager and son of its founder, Mark Marquis.

However, Brazil has been buying more ethanol from U.S. companies, like Marquis, to meet its government requirement for 20 percent ethanol-blended gasoline, or E20. Brazil is the world’s second largest consumer and producer of ethanol after the U.S.

No one knows how long that’s going to last, so to help grow the U.S. ethanol market, some Illinois lawmakers want to bring Illinois drivers more ethanol pumping stations through a mix of tax code adjustments and grants.

"We need to get beyond this E10, and the pumps help get us there," said Marquis, who drives a flex-fuel Dodge truck that primarily runs on E30. "It's a very wise vision, both short and long term, for more secure, cleaner and cheaper energy."

The idea is to increase demand for ethanol by encouraging Illinois drivers to buy flex-fuel cars and to buy more flex-fuel, gasoline that can be up to 85 percent ethanol, called E85. Flex fuel is offered in custom blends at the pump, and flex-fuel cars can run on standard gasoline or flex fuel.

House Bill 4700, awaiting further debate in the House Rules Committee, is referred to as the Consumer Fuel Choice Act, and "sends a message to consumers," said state Rep. Donald Moffitt, R-Galesburg, one the co-sponsors in the House.

"If you buy a flex-fuel car, there’ll be fuel available. And it supports our rural industry,” Moffitt said. “Profits from ethanol stay in our country."

The state also would earn a modest profit from it by ending a 20-year-old tax credit in Illinois for E10, which critics call a subsidy for corn farmers and ethanol companies.

The proposal would end a 20 percent sales tax credit for E10, which would earn up to $150 million a year for the state’s general fund, said state Sen. John Sullivan, D-Rushville, one of the Senate sponsors.
The bill also would create a new 10 percent sales tax credit for E20 gasoline and offer $20 million a year in grants, with $15 million going to ethanol companies for research and $5 million a year to gas stations to set up flex-fuel pumps.

Today, there are more than 8 million flex-fuel cars on U.S. roads, according to the U.S. Department of Energy, although it’s not clear how many are in Illinois.
Moffitt and Sullivan said they’re shopping around for General Motors flex-fuel cars; Sullivan said his Buick Lucerne has 110,000 miles, and he’s eyeing some of Buick’s flex-fuel sedans.

Right now, though, Sullivan wouldn’t have too many places to fill up his car with E85.

Out of some 3,600 gas stations in Illinois, only about 250 have flex-fuel pumps, said David Loos, technology and business development director at the Illinois Corn Growers Association, an industry trade group.

The 250 stations are scattered throughout the state, with fewer than 10 in Chicago.
Loos said the grants and tax credits under Sullivan and Moffitt’s proposal could encourage another 1,500 Illinois gas stations to install flex-fuel pumps.

The move to expand flex-fuel pumps in Illinois is also seen as preparation for the Environmental Protection Agency’s forthcoming approval of E15 gasoline for use in regular cars made after 2001, which would have to be sold at separate E15 or flex-fuel pumps.

The biofuels industry has been lobbying for E15 approval for years, and it’s expected to help the domestic ethanol market grow, or at least remain strong, said Will Babler, an analyst and broker at First Capitol Risk Management, an energy and agricultural commodities research firm.

“The infrastructure would be a big opportunity to move the market forward, because even when E15 gets approved, there'd still need to be a way to get it,” said Babler.

source: foxillinois